NextSource targets 2024 for fully vertically integrated graphite project with mine commissioning

NextSource Materials is increasing output from its newly commissioned Molo graphite mine in Madagascar to meet demand from the refractories sector and as part of its downstream expansion into the anode market

NextSource is ramping up production at its Molo graphite mine to its phase one nameplate capacity of 17,000 tonnes per year, executive vice president Brent Nykoliation told Fastmarkets, after commissioning the project in March.

The project will draw 30% of its power from a solar-thermal hybrid power plant, which is expected to be operational in June this year.

“This percentage can be increased when we expand to phase two production, and it will help us to lower our operating costs and be good stewards of the environment,” Nykoliation said.

The company plans to start shipping its graphite flake concentrates product, SuperFlake, to offtake partners in May.

“All of our phase one volumes are spoken for,” Nykoliation said, “with half of the 17,000 tpy to go to Thyssenkrupp, with which we have an offtake marketing agreement, to focus on sales into the refractories sector. The other half will go to our Japanese technology partner for the battery anode sector.”

NextSource image 1

The Molo project was commissioned in March 2023

The East Asian technology partner, which prefers to remain anonymous, already supplies coated, spherical and purified graphite (CSPG) to major electric vehicle (EV) producers.

CSPG is the active anode material used in lithium-ion batteries.

NextSource will need to move into phase two production to deliver a total of 35,000 tpy from its mine in Madagascar to Thyssenkrupp Materials, as detailed in its offtake agreement.

NextSource image 2

The Molo plant will produce 17,000 tonnes per year in the first phase

Meanwhile, Madagascar and East Africa are developing into global focal points for graphite flake production.

Tirupati Graphite and Etablissements Gallois (Madagraphite) are already producing graphite on the island nation east of Mozambique, where Syrah Resources has its Balama flake project.

NextSource will develop battery anode facility

NextSource is developing its own battery anode facility (BAF) in Mauritius with its technology partner, with investment support from Vision Blue Resources.

The company is also listed on the Toronto Stock Exchange and on the OTC Markets Group in the US.

“The investment into NextSource by Vision Blue Resources, which was founded and is run by Sir Mick Davis, enabled us to bring Molo into production this year, and has enabled us to fast-track our battery anode facility development plans in parallel,” Nykoliation said.

This new anode project will be built to the same proprietary processing specifications as NextSource’s technology partner’s BAF in China and is scheduled for commissioning in 2024.

“However, we do not need to wait for this facility to be operational to begin sending qualified samples of CSPG to [original equipment manufacturers (OEMs)],” Nykoliation said.

SuperFlake feedstock from Molo will be sent to the technology partner’s anode facility in China from May onward to produce CSPG, which can then be tested by potential customers.

“We can begin the verification process with OEMs starting in the third quarter of 2023,” Nykoliation said. “During this timeframe, our team in Mauritius will be trained in our partner’s Chinese facility to the same flowsheet. The two processes will be interchangeable – the only difference will be the change of venue.”

NextSource chose Mauritius due to the low cost for transportation from Madagascar and because it is on major shipping routes to Asia. It also offers tax incentives, and has an ideally suited infrastructure and a skilled workforce, Nykoliation said.

But the plan is that Mauritius will only be the first of NextSource’s BAFs, with others planned for the future.

“The company plans to construct, in stages, multiple BAFs globally in key jurisdictions that would be capable of producing commercial-scale graphite anode material,” Nykoliation said.

Potential sites in Europe, North America and the UK have already been selected, depending on which strategic partner engages the company.

“We have begun the application process for US, UK and EU grants and subsidies,” Nykoliation said.

Government incentives dictate graphite facility location

The US government’s Inflation Reduction Act (IRA) means that OEMs there will need their build their facilities in the US to be compliant with the program.

“With the IRA quotas, US OEMs need to find anode supply that is decoupled from China by 2026,” Nykoliation said. “That is not a lot of time, considering that it takes three to five years to fund, build, reach production, and then qualify their material. And that assumes the project has already been delineated.”

And critical minerals, such as graphite, must be sourced outside China or any other “foreign countries of concern” and must be processed in the US, or from a country with an approved free trade agreement.

“This restriction, coupled with the IRA’s huge incentives to build in the US, has ‘sucked all the oxygen out of the room’ in terms of discussions about location,” Nykoliation said, “forcing other jurisdictions such as Europe and Canada to also offer generous incentives to entice critical mineral processing and cell manufacturing investment.”

Interest in graphite has grown significantly among governments and consumers, Nykoliation said.

Graphite had been seen as relatively commonplace and inexpensive, and therefore its priority was behind cathode, such as cobalt and lithium, and cathode active materials.

“Graphite used to be the ‘forgotten sister’ of the critical minerals in a battery,” Nykoliation said. “But, in the past year, there has been a significant shift in focus among OEMs to the anode, given that roughly 40% of the volume of an EV battery is graphite and China controls virtually 100% of graphite processing.”

In turn, there has been a growing awareness of the limited sources of active anode material outside of China.

“NextSource is in a rarefied space,” Nykoliation said. “We now have a mine that offers a secure supply of feedstock and, by next year, we will have a vertically integrated operation with our first BAF in operation, using a well-established proprietary anode processing technology currently supplying CSPG to major OEMs. There are very few graphite projects outside of China that can supply flake in the quantities that demand forecasts are predicting.”

Natural or synthetic graphite options for consumers

Cell-makers can use natural or synthetic graphite in their anodes, and NextSource will work with its technology partner to develop synthetic material, as well as the natural coated spherical graphite.

“Our Japanese partner is also an established supplier of synthetic graphite, as well as silicon oxide,” Nykoliation said. “As a result, we have begun to investigate the processing of synthetic graphite as well, given that all EV batteries also contain synthetic graphite.”

NextSource expects that the portion of anode material made of natural graphite rather than synthetic graphite will increase because of its lower price and the lower carbon consumption in its production.

Currently, Fastmarkets only assesses prices in the uncoated spherical graphite market on an FOB China basis, to reflect China’s domination of supply and because a market in coated material has yet to be defined.

Fastmarkets’ price assessment for graphite, spherical, 99.95% C, 15 microns, fob China, was $2,200-2,500 per tonne on April 20. This was down by $700-800 per tonne compared with $3,000-3,200 per tonne on October 20 last year, due to weaker-than-expected demand and strong supply.

“We are not seeing the emergence of any standardization of specifications,” Nykoliation said. “Instead, we are seeing various specifications unique to each OEM.”

Fastmarkets currently assesses the spherical market for a size of 15 microns but there are calls among some consumers for smaller micron sizes, to improve the performance of the battery.

“But they are more costly and difficult to produce,” Nykoliation said. “So while OEMs may want greater battery range and performance, this will probably mean higher costs.”

This throws up a dilemma for EV producers in balancing the contrasting needs to reduce costs while improving performance.

“An EV battery represents 30-40% of the total cost of a car, so there is a concerted effort to reduce the cost of the battery to reach price parity for EVs with [cars with internal combustion engines],” Nykoliation said. “However, consumers want a safe and reliable product with maximum range on a single charge – one comes at a cost to the other.”

A move to standardization of specifications would allow the market to become more streamlined but, under the current conditions, OEMs define the size they want.

“We are fortunate that our partner already has significant experience and expertise in producing a wide range of specifications,” Nykoliation said, “and today produces micron sizes ranging from 10 to 50 micrometers, depending on the application and OEM customer.

“The advantage of the process and [intellectual property] we are mirroring,” he concluded, “is that we will be able to meet the specifications of the customer, but we hope that the sector moves to some form of standardization in the future.”

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